In this episode, Rob Pyne is joined by David Sharpe, Chair of the Financial Advice Association of Australia and Principal of Globe Financial Planning. David shares his personal journey into financial advice and offers a front-row view of the critical reform efforts shaping the profession today. From CSLR and DBFO to education pathways and red tape reduction, this is a candid and insightful conversation about professional leadership, policy advocacy, and the future of accessible, high-quality financial advice in Australia.
LISTEN
Apple Podcasts:
Podbean:
Spotify:
SHOW NOTES
Topics Discussed
From Pet Rocks to Personal Finance
- David’s unexpected entry into financial planning after a stint in geophysics
- Why the concept of a “trusted adviser” still resonates two decades later
- What inspired him to give back through leadership roles in the profession
Leadership and Representation at the FAAA
- How David became Chair of the national board
- The challenge of balancing feedback: “pats on the back and kicks in the bum”
- Why having a practitioner at the table helps humanise the advice profession to regulators
Amplifying the Voice of Advisers in Canberra
- How the FAAA shapes a unified message across differing member views
- The power of collaboration through the Joint Associations Working Group
- Why the profession must speak as one to influence meaningful reform
Fixing the CSLR (Compensation Scheme of Last Resort)
- The injustice of good advisers funding failed product schemes
- 35 recommendations submitted to Treasury to make CSLR fairer
- Calls for sector caps, better AFCA accountability, and indemnity from ASIC inaction
- The urgent need to stop retrospective charges that punish current practitioners
Red Tape, SOAs and the Case for Professional Judgment
- Why Safe Harbour should go and SOAs need simplification
- The confusion caused by overlapping disclosure documents
- How compliance burden drives cost and deters new entrants
- The need for unified, digital consent processes
The Adviser Pipeline and Pathways
- The looming education cliff and why a flexible approach is critical
- How finance and economics grads could enter with a four-unit postgrad pathway
- The launch of Advice Academy to support Professional Year (PY) candidates
A Profession Ready to Regulate Itself
- Why David believes the profession deserves co-regulation rights
- The long-term goal: setting education standards and discipline processes internally
- His hope that government will trust advisers to lead their own standards
Quotes
- “We’ve met all the hallmarks of a profession. We’re ethical, we’re educated, we’re examined, we’re experienced… and with that should come the privilege of professional judgment.”
- “We’re not just some large corporate monolith. We’re actually real people with families, kids, mortgages… and we are genuinely trying to make a positive difference for our clients.”
- “I just think being able to give a simple answer to a simple question—that would be success.”
Resources
- FAAA – Financial Advice Association Australia
- Compensation Scheme of Last Resort (CSLR) Recommendations
- Delivering Better Financial Outcomes (DBFO) Tranches 2A and 2B
- Michelle Levy’s Quality of Advice Review (QAR)
- Joint Associations Working Group
- ATO Portal Access Submission
- FAAA Advice Academy for PY Support
TRANSCRIPT
Rob Pyne
Welcome to The Trusted Adviser podcast, where you get a deep dive into the world of financial planning with industry leaders who share their stories of winning and learning as they chart their path to success. This podcast is for the curious. Those of you who like to dig into the detail, and if that sounds like you, get ready to listen and learn. And if you’ve been here a while and you’re getting value from these conversations, I’d really appreciate you subscribing or leaving a review. It helps others discover the podcast and join the conversation. In this episode, I’m joined by David Sharpe, chair of the Financial Advice Association and principal of Globe financial planning, David brings a unique perspective as both a practitioner and national leader, advocating to government for meaningful reform in our industry. Together, we unpack the personal journey that brought David into advice, how the profession has evolved, and the critical advocacy work being done on key issues like the compensation scheme of last resort, direct, ATO, Portal, access, red tape reduction and education pathways for new advisers, whether you’re a seasoned planner or just starting out, this episode offers a valuable window into professional Leadership, Policy insight and a path forward for accessible, high quality advice in Australia. Let’s get into it.
Rob Pyne
Welcome David Sharpe to The Trusted Adviser Podcast.
David Sharpe
Thanks, Rob. Thanks, for having me on.
Rob Pyne
Great to have you on Dave. We’ve known each other a long time. We’re friends, and we stay very connected to what’s happening in the world of financial planning. And you, with your role as the chair of FAAA, means we are often talking about all things financial planning. You see it really up close and personal on your position on the board, but I want to go back to the beginning and really just better understand your story. What inspired you originally to become a financial adviser, and we’ll get to the older stuff about the legislation and your role on the board, but I want to start back at the beginning. So, what inspired you to become an adviser, and how has your view of the profession evolved over the years since you started?
David Sharpe
Yeah, great question, and probably, like a lot of financial planners, fell into it, right? So, I’ve got three young boys couples have come towards the end of high school, and they’re thinking about their career. So, when I left school, moved to uni. I love maths, I love physics. I still do so went into geophysics, right? And hated it. Hated it because the maths was fun, but then, like, you can’t talk to a rock it doesn’t talk back, right? So, it’s not very personable. So, I sort of left Uni after about a year and a half realising I hated that degree, went traveling, came back, knew I’ve loved numbers, I love finance, but my dad was a chartered accountant. Didn’t want to be a chartered accountant because, you know, my dad was. So looked around and as it was, did a finance degree came out of Uni and got a job in a financial planning firm. So, sort of like more than thinking financial planning, per se, just wasn’t quite sure what I was thinking. And really, really, I realised I loved it, hated the company I worked for that first job, but loved the role, and loved what I could do. And I guess it’s almost as though that first job shaped my view of the profession, and first my view of the profession hasn’t changed, which is when that trusted adviser, excuse the pun, but we’re that trusted adviser to help our clients make a series of smart decisions to achieve whatever success is for them, right? And so, I don’t see that in my view of what our profession is having changed. I still think that’s what we are. However, I think the profession has morphed so that the vast majority of us is that’s now what we do, whereas I’m not quite sure in 2003 that was the case.
Rob Pyne
Yeah no pun intended, but that’s what it’s called, the Trusted adviser for us, because that is the role we play in the world of the client. So, we weren’t fond of having a pet rock or two, okay, coming to geophysics and decided that with the maths and physics background, your skills in spreadsheeting was pretty strong, and you’re actually good communicator as well, to pretty good combination for a financial planner. So hence your success in the roles and moving beyond being a planner. Obviously, you created a business of your own, Globe financial planning. You’ve built a successful career, and really wanted to take a step beyond just your own business and try to contribute to the profession. So, you spent several years now on the national board, initially with the FPA and now the FAAA, and I’m keen to know what originally motivated you to become involved in the leadership of the profession, and how has your perspective evolved in that time since you became chair of the FAAA,
David Sharpe
yeah. I mean, in terms of how I started getting involved in what was the FPA. It was actually a mutual colleague of ours, Pippa Elliot, and you’re on the state chapter with her. I think the rule was You can’t leave until you find someone else. And she was like, Dave, I’m out. You’re it. And so, sort of stepped onto the local chapter and had a literal tag team. Yeah, that’s right. So, I blame you and I blame Pip for that. But then look, I’m actually one who gives back so I was on my old school board, or in my 20s, I went and did that. I’m a junior president of the cricket club, so giving back to communities that I am passionate about is not unusual. And so being on the state chapter and helping run the events and engaging members. You dealt with, I guess, felt like head office back then, and always felt like a vacuum of, why is this decision being made? And that natural curiosity encouraged me to put my hat in the ring to be elected from my peers to get on the national board. I was lucky enough to be elected first time, which I’m told doesn’t happen all that often. Was re-elected, and then Yeah, sort of stumbled, what a better word, into the chair role, yeah.
Rob Pyne
And so how has your perspective on the profession changed since becoming chair? How has your responsibility and overview of what’s going on in the profession changed since taking on the chair role? Has it been similar to being on the board and in the chair role? Obviously, there’s more duties that you’re responsible to undertake as the chair. But has that changed your perspective on the profession and the FAAA’s role in the profession.
David Sharpe
Look, if I think back to my time, and I get a lot of feedback from members about what we’re doing well and what we’re not doing well, right? You get pats in the back and kicks in the bum, right? So, it used to be a lot of kicks in the bums, not many pats on the back. It’s probably reversed of late, and it’s interesting. I get feedback saying, oh, you know, you guys are doing this now. You never used to. And I think about my time ago, we’ve always been doing a lot of these things, but I didn’t communicate very well what it was that we did. I guess, in terms of being chair versus director, you’re right. Lot more duties, a lot more time. From a pure governance point of view, your obligations as a director don’t really change, but certainly now being much more, I guess, the face of the organisation in certain areas, along with Sarah, you know, meeting with politicians and government and regulators, it’s an important role that at I see is, I’m not a chair, I’m just a practitioner. I try to put a face on the practitioner running a small business in Perth to the various decision makers that we have to see that we’re not just some large corporate monolith. We’re actually real people with families, kids, mortgages, and the like, and we are genuinely trying to make a positive difference for our clients and get that message across to regulators.
Rob Pyne
Yeah, it’s a great role, isn’t it? I mean, if you’re a practitioner, you had a great predecessor in Marissa Broome, and so the actual person in the trenches giving advice, seeing clients, is actually sitting there as a chair, and representing the profession and advocating for the profession and the clients we serve. And so, let’s talk about advocacy. You just talk about politicians and the role you play in helping them to understand the important work that we do and appreciate the challenges we face in someone’s delivering that work. So how does the FAAA ensure the voices of advisers across the country are heard at the highest levels of government,
David Sharpe
Look great question, and the hardest part of that is actually understanding what the voice is, right? So, you get a lot of feedback from members saying, oh, you should be doing this. You should be doing that. Now, we engage with members a lot, probably to the point where it’s over saturation. It’s, you know, another survey, another question. Give us that feedback, but we genuinely want to know, because the key objective is to represent the interest of our members, and we’re unashamedly association of members. So, you know, whether it be surveys like we have had, just for DBFO 2, we’ve got a committee which is made up of practitioners. The board is majority practitioners. And sometimes you get issues like CSLR, where the membership is united, right? I haven’t had a member come to me say, no, we love it. I’d like to pay more than $10,000 for the wrong buildings of a listed entity, right? I’m yet to have that so 100% of members. But then sometimes you get issues that are split, right? You might get an issue which is a third, a third, a third, a third think, well, my a third, think the other third. Just don’t care. And that’s when it comes a bit harder. So well, which position are we going to take it? And often that’s there where you’ve got to take a leadership position in terms of, I guess, coming back to the second part of that question, which is, how do we get in front of politicians and regulators, whether it’s like or whether it’s been a professional relationship for many, many years, we never seem to have an issue getting in front of the minister or getting in front of ASIC or Treasury. In fact, there’s regular meetings with asset and Treasury and various working groups where we’re often encouraged to come in. Might be AFCA, but also it’s, you know, other key stakeholders, like licensees or other Association heads, that we are constantly meeting with, with the idea that if we just have our voice and the voice of financial advisers, that’s one thing, and that might get some cut through, but if we get a unified voice across the board spectrum, it amplifies our message, right? And so, yeah, something like a tax adaptability of advice. I mean, we drove it, and we got success out of it, but we brought other associations on the journey with us to be able to make sure that, okay, the ATO heard that and heard that loud and clear, that this was something that we wanted revisiting. And when we work with other associations. We don’t compromise our members interests. If we don’t agree, we don’t submit together. What we do is we submit when we all have agreement, and if we don’t agree, we don’t submit. If we do agree, we do submit. And that’s how it works. And what we’ll do is say well, we don’t horse trade we’ll give you this If you give us that,
Rob Pyne
that’s a good point, and thanks for the clarification. That’s the joint associations Working Group business. So, you’re essentially coming together with industry associations, professional associations that have a common interest in the financial services industry, and where you agree on a subject matter, you can present a united front and try and get consistency there. And the voice that clear voice one voice through to politicians and regulators. So, in terms of shaping that voice, it’s an interesting point you made about the way that you need to kind of interpret what is the voice we’re going to share here, because you mentioned pats on the back, kicks up the bum. You know? The fact is that more taps in the back lately, which is a great credit to you and Sarah and George, and
David Sharpe
it’s a team effort for the whole board and the whole management, right? So,
Rob Pyne
Yeah so, I don’t think the profession of advice, with the unity of the AFA and the FPA, has been in a better place in terms of having that consistency of who’s talking on behalf of advisers across the country. So really, really monumental shift in that dynamic around how we are one voice now and then, obviously there’s an interpretation of what is the issue, but with labour now re-elected, what signs of political will do you see? We don’t know the minister yet. We’ll find out probably in a day or two. Now we’re talking literally on Wednesday the seventh, so the election was literally only a handful of days ago. So, what political will do you see, or hope to see from the Albanese government re-elected, in terms of pushing for with meaningful financial services reform.
David Sharpe
Yeah, look, we’ve been told it’s going to be a priority for the Albanese Labor government. We’ve been told that. So, taking it at face value, we would hope that that’s the case, and we’re pushing for the reforms around DBFO CSLR to get through it’s not always in politics face value. I know that’s probably not going to be a surprise to listeners, but I only naturally one that if you get told something, I’ll believe it until people lose that confidence, right? So, in principle, we’ve been told that this is a pro to get through. You know, a lot will depend on the minister, and they’ll want to potentially stay out there in Pramada as well, on what comes through. Obviously, Fore Minister Jones had put through some reforms. Let’s call them DBFO 2A’s, sort of like the first third of the package of the second tranche. And it’s definitely taken a while to get to this point. You know, I remember sitting in a hotel in the Gold Coast with Michelle Levy, as you know, this is well before the recommendations were even put together. It feels like that. Feels like a lifetime ago, certainly a lot of grey hair ago. Look. But what I will say, and this is probably a big learning that I’ve had, the complexity of stakeholder interests are significant. And this won’t be a surprise to listeners, if they’re advisers, we know the laws that we have are complex, right? You’ve got Corporations Act within talks the facial COVID, which then talks to the privacy which talks and so if you make one change, it has a flow on effect, and I think that’s made it hard for Treasury to then draft something that meets the intent, potentially, of the QAR report. Now DBFO ministers intent, so I understand why there’s complexity, and there’s also a drain on Treasury resources. There’s only so many people who can actually draft the legislation for the Minister to review. So that’s all the changes, but I guess I’ve put my hat on the FAAA, which is, I don’t care. I just want to see a meaningful change for our members. So, look, we will wait for the new minister to be announced. We will look to meet with them as soon as possible and prosecute the argument for our members. And we’ll do so in a way because it’s not as though we’re just trying to be greedily, trying to profiteer our members. I always think what’s good for our country and what’s good for consumers is almost a concentric circle with what’s good for advisers. I don’t sit in front of a minister going, oh yeah, profitability is terrible. So therefore, we need to do this. We’re looking just as much from a consumer’s eyes as we are our own because that’s what a profession does, right? We put our clients best interests first, and so look, we want to see what the new minister is like. We’ll be, hopefully, towards the front of the queue and getting to meet them and prosecute our argument to get things pushed through as quick as possible. Yeah, I couldn’t agree more.
Rob Pyne
I mean, you’re, as you say, prosecuting the agenda, but you’re actually doing it with a view to making the profession more able to deliver more service to more service to more Australians. And that is ultimately the objective of the government too, at least that’s the stated objective. And so hopefully, with political will behind it and a commitment to deliver on the remaining components of DBFO, that we do see that sort of opening up for advisers to be able to deliver advice to more Australians and not be impeded by some of the obstructions we have in our way at the moment, none bigger than the one you’ve already mentioned, which is the compensation scheme of last resort. This is one that I’ve been frustrated by because of the scenario you played out there a moment ago, saying that, you know, no one’s keen to pay an extra $10,000 for the failings of a business that has since walked away from its obligations and left the pieces picked up by the profession that’s looking after the clients and doing it in a way that’s actually in their best interests. So, the FAAA has been equally vocal, or more vocal, than anyone, and Phil Anderson has been leading the charge here. And I applaud Phil for being really strong and staying with this, and Sarah has been equally strong and everything I’ve read and listened to, so it is unfair treatment advisers. No one’s disputing that. I don’t think, and in fact, I wonder, even if the minister has, in private moments, confessed to that, the former minister confessed to the unfair treatment we’re copying at the moment, can you walk us through what you believe is a fairer, more balanced model, and how that would look in terms of CSLR for advisers,
David Sharpe
yeah. I mean, look, we’re up to about 35 recommendations, I think what we sent through to Treasury to fix CSLR. So, we see a lot of holes that need fixing, and some of those are, you know, really simple where people there’s not a natural offset. If someone’s claims through the courts, they could double dip on compensation. I mean, they’re just simple things that should be easily fixed, and I can’t see anyone having an opposition to it. I always say this, and I’ve been speaking around when I do road show, if what it was for CSL was, hey, advisers, can you all contribute X amount? This is going to help run the organisation, and it just means that we’re going to have an organisation or a scheme that helps remediate poor financial outcomes on the back of not just advisers a range of things. And your contribution is 600 bucks a year, and that’s what you pay. I think advisers go another 600 bucks, but we’ll deal with it right. I think where the injustice comes for is we’re doing the right thing. We’re spending a lot of money doing the right thing, making sure our clients get looked after, and we have to pay for people who don’t. I think that’s what sticks in the crawl. It’s not so much the money, it’s that element of it all. So, if I mentioned there’s 35 things we’ve asked for. But if I was to focus on, I guess some of the bigger ones, when this was first pitched, there was a ten million cap on advisers. Those the sub sector cap. And so, we would like that implemented, right? So that’s about $640 per adviser manual account numbers at the moment. And then yeah, with the Minister to make a comment that they won’t go over that, so we’re not going to get led with it. We also think managed investment schemes should be in a conversation scheme of last resort.
Rob Pyne
That’s been a clear issue, hasn’t it? Really, there’s been some debate, and certainly the examples that have been in the press, there’s a strong case to make that it’s not just been poor advice, but it’s actually been product failure that’s been led by product issuers that have contributed to some of the failings, and at the moment, the advice profession, purely has been asked to pick up the tab for all of that.
David Sharpe
Almost all the large amounts have been resulted product later, right? The obvious advice component attached to it as well. But if you were to say it was 100% advice, I think is wrong. And also, if you’re an ombudsman at AFCA and you’re looking at it and going, if I give this all to advice, the person will get their money back. But if I give it 30% to advice and 70% of product, they’ll only get 30% of their money back. Now, there are some reasons why they do 100% advice as well common law, but there is that natural tendency, which is, okay, I want this person remediated. They’ve been wronged, and this is the only way we can do it. This is the only way they’re going to get some of their money back. The problem is, and I’ve said this to David berry at the CSLR, I see advisers as a victim as well, of Dixons as an example, because advisers are the ones are also forking out money to clear out Dixon then there’s a range of others as well. We’ve done nothing wrong. We’ve acted in good faith, and yet we’re still handing out money as well. So, I’d like to make that point really clear. So, NYS should absolutely be included in the compensation scheme of last resort. When CSLR was first brought in, it was supposed to be prospective distance, and the behaviour was all retrospective. So why are we looking back at behaviour number of years ago and then paying for it effectively after the legislation was brought? In fact, I was lecturing at Uni last year. I said to them, you know, you know when you’re in year seven and, you know, you’re pinching each other’s lunch or whatever. There’s some wrongdoing. Then you’re now, if you get become an adviser, in three years’ time, you’d be paying for that, and there’s the staff would look in their eyes. But that’s effectively what’s happened, you know, we’re getting these, these kids coming through, and it’s a cost for people eyes and stuff like that, for businesses. But effectively, they’re gonna be paying for wrongdoing for many years ago. I’m not sure that’s right. You touched on walking away from obligations to that, whether it’s legally Financing or not, it’s effectively what’s happening, you know, close down a licensee, transfer across the clients, potentially the assets to another business, and then restart it, and away you go. And you can walk away from obligations.
Rob Pyne
It creates a scenario that you’ve spoken off before, which is this moral hazard that you actually can knowingly walk away from liability, knowing you can actually just escape it by walking and leaving that shell company behind, the company as a shell and all the losses and the problems associated with that, and knowing full well, the rest of the professional pick up the tab, and the clients are worse off anyway. So really, we can walk away and wash your hands of it as the architects of the failure. We can leave it behind and not have to be accountable for that.
David Sharpe
Yep. I mean, you talk about unfair, I think it’s unjust, and it doesn’t seem to be any recompense. No one’s been held to account. That was directors or whatever at Dixon’s or others because no one’s been held to account yet.
Rob Pyne
I think you’ve rightly put it as the financial planning profession, the number of victims has just broadened to include financial planners to say, let’s spread the load here and make sure the planners now end up being victims. In effect, to remedy the situation those poor clients find themselves in, albeit that the calculation has been applied to these losses. Was this, but for situation, but for doing this, they would have had this. And so is one of those 35 things you’ve asked for to go back to simply restoring them to neutral, as opposed to trying to compensate. Yeah, yeah.
David Sharpe
Absolute loss is, you know, what we should be looking for. We’re not here to indemnify returns, right? But otherwise, why we saw put everything in the vanguard balance.
Rob Pyne
fund, I couldn’t agree more. Like it just seems like, just do it, if you like because that’s you’ll get the. Other that you need by simply taking any risk you like and know that you’ll be covered for the growth that you missed out on. If it all goes wrong inside. Yeah, it’s just biggest belief, really doesn’t it.
David Sharpe
If I was less ethical, I’d send my wife out there to make $150,000 investment in the riskiest thing possible buy her an adviser, and then, if it didn’t fail, then complain to get the 150 grand back.
Rob Pyne
It’s just nuts. It just doesn’t make any sense at all. So clearly
David Sharpe
I’m not doing that, by the way I’ve just.
Rob Pyne
No no I know.
David Sharpe
It’s one of those things where you’re angry at night over something, and I just start thinking about it.
Rob Pyne
It can’t be true, but it is, and let’s hope, as the first thing on the radar that the FAAA has made on their five key points that be the one that gets tackled.
David Sharpe
Can I say, two other things that we’re asking for Rob with CSLR as well, and as advisers, we pay an ASIC levy up front to monitor and look after the wellbeing of financial planners and make sure our conduct all that’s underway, and then the back end when there’s been wrongdoing, we pay for as well with the CSLR, we know those complaints about Dixons to ASIC prior, right? And so, what we’ve asked for is an indemnification of the profession. But if we go to asset and say, here’s a problem, and they choose not to investigate or they choose not to go any further, why are we then paying? We’re paying to do the job, if they then don’t do it, why are we then paying when it goes pear shape to the end? I love that. So, an indemnification for the profession, and also another one, which is, again, seems logical if there are fines as a result of assets conduct that should go with the CSLR pool. So doable. Westpac was fined about $100 million a few years ago that went into general revenue. So, there’s a lot more work. So, our levy went up, right? It ended up trembling. So, our levy goes up, we pay for it all, and then when there’s a win, it goes in general revenue, and we get nothing out of it, so put back into the pot to remediate consumers.
Rob Pyne
Yeah, he talked about the term being unjust, and you’re absolutely right. What’s occurring here is unjust. But any fair-minded person would look at what you’ve just said there and say, that seems perfectly fair, that seems reasonable in the circumstance. So why would it not be that? Well, it’s just because it’s conveniently not that, because it doesn’t serve the interests of the government who wants to put that money back in general revenue and not offset the cost. There’s no incentive to act efficiently and get ahead of these things before we actually pay for it ourselves through the CSLR. So, let’s move off CSLR, because we could talk all day on that one. That’s absolutely true. It’s been a real pain point. But let’s talk about another one that seems to be eminently doable. It’s the idea of providing advisers with direct access to the ATO portal, seems like a no brainer. What progress have we made on that front and what still stands in the way of that happening? Do you think?
David Sharpe
what stands in the way? I think the main one is money. But you had a submission late February for let’s say February 28 there’s no opposition to this, by the way, and you’re right about being a no brainer. So, there’s no like, when the accounting groups are on board. I think the government even says, okay, yeah, we can see why you would need this. And even, I think you think of the principle of the consumer data, right? You know, the consumer owns their own data, they should do and if they want their adviser have access, then that should happen, right? So, from a philosophical, from a principal point of view, everyone’s on board, and that’s why everyone sees it as a no brainer initially. If I was to go back a number of years, one of the issues was there’s a structural problem around having two tax advisers effectively on the same record. And I think that technical issue around infrastructure and it is what’s holding us back. There’s some cyber security issues and stuff making sure that that’s all solved, but I think the biggest one is the money required to invest to update systems. That seems to be the biggest issue at the moment.
Rob Pyne
Well, it’s good to know they don’t have any philosophical or principal objection to that happening. And hopefully that’s something that we can see with an investment in some improvement in systems. So
David Sharpe
and just be clear, Rob as well on that we don’t need rights to it’s just reading. I think about it as read only view we don’t want rights to be able to make changes. We’re still comfortable with accounts about us. I just want to go on and say, what’s your contributions been over the last five years? What catch up have you got? Or what more concessions can we do? Like, I just want that information.
Rob Pyne
Yep, view only is all we need, isn’t it? Just those, uh, historical super contributions and like. So, let’s get on to the big package we’ve talked about so far at DBFO Part two, a so to speak, DBFO has seen a step in the right direction. How would these proposed reforms change the way you think advisers will operate day to day, particularly with the removal of Safe Harbor and streamline consent processes, because the safe harbour steps the best interest duty that’s been a key part of this whole objective around DBFO. How will our businesses operate differently day to day if we do get the removal of Safe Harbor steps and the streamlined consent process in place?
David Sharpe
I mean, look, we haven’t seen what the modernisation of best insurance duty is that wasn’t part of that package to a so we’re hoping it’ll be part of to be and so the explanation I’ll sort of give out there just to the general public is, if I said, What do you think best interest means, the feedback from Joe Public will be, I think you’re acting in my best interests. I was like, Yeah, and that’s what it should be like. Have you been acting in a client’s best interest? And I’m yet to find too many advisers that disagree with that, right? What we have, though, is a seven or eight step ticker box that says. Just prove that you’ve acted in someone’s best interest. And so, you feel almost as when you’re giving advice to a client, that your first obligation is to make sure assets happy, and then worry about whether the client can be happy. And that’s probably a fear of advisers have had. You know, I remember when I started FSRA, I just started, I was so fearful of if I didn’t give my FSG out on time I get six months jail. I still feel this now, right? And so, it’s the same with, you know, I think initially, most advisers, and probably licensees as well, will have that fear factor that even though it’s been removed, we’ll still do it for a little while, but then you’ll start seeing, you know, the brave buffalo crosses the water, and they’ll start making changes. And we’ll get back to a genuine client first mentality, which is this in the client’s best interest. Let’s do it. Let’s not worry about what box ticking we need to go through first. Let’s make sure that that’s what we do. So, we’re hoping that modernisation comes through and allows advisers to spend less time on compliance tick boxes and just evidencing that they done the right thing and just doing the right thing.
Rob Pyne
Yeah, we’ve trained as a professional treat us like a professional
David Sharpe
Yep, and we’ve heard that, right? So, we’ve gone through, we’ve taken the pain, we’ve lost half our numbers, but if you think about it now, we’ve met all the hallmarks of profession. We’re ethical, we’re educated, we’re examined, we’re experienced, right? We’ve got to meet all those criteria, and with that should come the privilege of professional judgment as well. So that’s sort of the streamline in terms of consent. We have had fee consent come in that has simplified a lot around opt in and FDS’ and the like, or disclosure statements. But what we haven’t had is a mandating to use the one consent form. If you think back to what we had with AML, CTF, we had the one form that we all everyone accepts, and that’s great. Well, we need that and particularly in a digital form for fee consent, because every product’s going to require their own right, and we’re already seeing it without direction. Everyone just go and build their own. They’ll have their interpretation of what the law requires, build their own. And from an adviser’s point of view, we’re just filling in different forms again, and so we just want filling one form, do it once you know, like a one-to-many approach,
Rob Pyne
yep, and get it unified across all the platforms and make sure that it’s digital as well. And let’s just smooth the process a little bit, even though we’re still going to be getting consent, but just doing it in a much more efficient way than it’s possible. Now, across the different platforms will have their own forms, and it’s all often hard copy as well. So, the other point on your top five priorities, the f triple A and I say your priorities, but really they’re our priorities, the whole profession’s priorities. Profession’s priorities. Is a call for razor gang to cut red tape. It’s interesting one, because there is so much red tape the profession has moved beyond the legislation. Legislation was built for a profession of 20 years ago or longer, and you talked to FSRA, and you know, you look back at what the requirements of an SOA are, and the proving that we’re doing the right thing by clients, a lot of it was built around this idea. There was conflicts built in. And so, you had to prove that you’re doing the right thing, because it’s conflicts. And those things have all but been eradicated, if not completely eradicated, by law. And we’ve been trained to be professional. We’ve done the education. So, what areas of regulation, if you like, do you think are the most in need of pruning, and how do you see that process working in practice? Where’s the red tape we want to cut?
David Sharpe
Yeah, look right SOA’s are still number one, and although it was put forward as part of DBFO 2A we think there’s greater scope just to reduce the complexity and the need for statements of advice, and I’d love their professional judgment around when an SOA is required, maybe when a much-simplified ROA is required. You know, using things like materiality and stuff like that, I often use these examples where I remember he’s now about to have his 21st birthday, but my nephew, Mitch came to me, he’s a 15, got his first job at the local supermarket, and Uncle Dave, which super fund should I choose? Well, of course, I can’t tell him right? Well, I can, but then I’m breaking however many rules, right? So, I should be able to sit down with him 15 minutes, talk to him about, okay, this is what happens when markets go up. Markets go down. But you’ve got, you know, 50 years of work, mate, let’s take the high growth option in a cheap industry fund, and away you go. I reckon I could do that in a pretty short phone call or meeting with the parents. I can’t do it. I’m not relied upon to use my judgment. I’ve got to go and document the whole process and think about, you know, broad circumstances and all those sorts of things where it’s really quite a simple question, but I can’t give a simple answer. So, I’d love greater valuing of that professional judgment, particularly around statements of advice. I think the Code of Ethics needs reviewing and the language that’s used in there, and you talk more about consent, you know, and clients should know what they pay. You know, standard six talks about clients should know and should be fair and honest and completely agree. But it says mandated to go in various forms, like we put in our SOA, we put in our fee consent form. Shouldn’t it just be the client should know now whether it’s in an SOA and whether it’s in a fee consent form, whether it’s in an annual contract, whether it’s in a whatever, as long as the client knows what they’re paying, why are we prescribing what method that they know by? And so just the repetition that we have where we’re doing multiple documents for the same thing, you know, Rob, I’m sure you’ve had this with the client. They go, am I paying this fee again? And you go, no, no, no, you’re not paying again. You just sign off on it again. They go, why? Why you have to shake your hand. You go, I don’t know why, but we just have to, yeah. And so just that repetition of documents, would love to go through and then fixing the language in some of the code of ethics, because I think, in principle, the code of ethics should have been the biggest free kick to advisers going, because I’m yet to meet anyone again who thinks we shouldn’t have a code ethics, right? We absolutely should, and it should be principles based, and that’s what should govern the way that we operate. But you’ve got this principles based, and then you’ve got other legislation within mandates, you know, into the minutia of what you need to do it, and sometimes it’s competing, right? So, what do you do when you’ve got two requirements that actually compete?
Rob Pyne
Yeah, well, that’s right, you’ve got to say principles-based guidance through the code of ethics, and then you’ve got prescriptive based legislation to follow to the letter. So those things are, at times, at odds, and certainly the prescriptive nature of the way in which you deliver advice is what makes it significantly more challenging and costly to deliver advice to more Australians. So yeah, couldn’t agree more. And let’s go to this other one that’s kind of been around now for a few years, since we’ve seen the significant drop in adviser numbers, and I’ve seen a few suggested ideas here around how to reverse the trend of attracting new talent to the profession. What’s the FAAA’s approach to this question?
David Sharpe
Yeah, look, the short answer is, there’s no silver bullet, right? And we’ve got another cliff coming up January next year when the education requirements kick in. So, we’re not quite sure of the numbers, but you know, we’d expect there’d be another fall off at that point, and that’s probably the last, the last of the point of term bloodletting that’s happening with the profession from a FAAA point of view. You know, our numbers have absolutely dropped as a result, but I think we fared pretty well because most of our members have already had a journey towards education. It hasn’t been new to them so begrudgingly that we’ve all had to go and do something. But that principle of going to do education hasn’t been that bad. But by and large, our numbers are fair pretty well, but we’ve still felt the pain as well. So, I mentioned it’s not a silver bullet. So, we’ve got to get into more University, and we spend a lot of time doing this. The challenge is the education standards are so prescriptive that’s it’s hard for universities to make money running the courses right? And even things like just wanting to change the name of one of the units, it’s not allowed because then it’s not FASEA approved at what was known as FASEA approved. So, you know, there’s a lot of work we do in there, and then talking to students as well. You know, it’s really interesting. Well, you might recall, when you do your commerce degree, often your first year is just a common core, and so you’re doing a bit of accounting, a bit of law, or a bit of property, a bit of fine, a bit of everything, right? And it’s not just getting kids out of school knowing about financial planning. It’s actually sometimes targeting those who are doing the common core units and getting their personal financial planning into that Common Core or at least one of the electives in that first year. Because often students do that and they go, well, this is actually pretty cool, yeah. And I want to do more of this. This this is great, like, how do we do more of this? And I want to pick on accountants, mainly because my father’s a chartered accountant. I love the fact that with financial planning, we’re looking through the windscreen of the car. We’re looking for, we’re thinking about what’s coming ahead, as opposed to looking through the rear-view mirror about what’s happened. And I love having that conversation about, you know, controlling the controllables, what’s actually important to you, and looking forward. So, I think it’s an attractive profession. There’s certainly demand for numbers. So, if you’re looking about, you know, are you going to get a job at the end of it? Absolutely. I think getting some back of left. If we can get regulation down, and, you know, that frustration of what we’re doing, get some back. I think that would be great skilled migrations. And, you know, another arrow. It’s not going to be the panacea. We’re not expecting to have 1000s and 1000s of migrants coming in being financial planners. But financial planners, but if we can get some, that would be great. We’re also establishing a project hoping to launch pretty soon, called advice Academy, which is helping PY candidates and firms get PY through that process as well. Because we know that can be complicated for both the candidate and for the business, particularly if they’re a small business, and making sure that that’s more a big of a cost drain on businesses on the way through.
Rob Pyne
Yeah, the other idea I’ve heard to help reverse this trend of adviser numbers is just making it more available to commerce graduates, finance graduates. So, this was a proposal that I think that Fore Minister Jones even put up before the election, and I’d seen it somewhere else as well. Keith Cullen, I think who’s the head of WT Financial Group, had also said it on LinkedIn at one point that this makes so much sense, because they might still have to do some additional post grad units, but they’re actually in a finance rated course, so rather than having to walk a narrow path, which is a particularly a financial planning degree. Let’s give them a path to actually, because so many of the young people that have joined our firm, I said, how did you come across financial planning? What makes you want to be a financial planner? And they were doing an economics degree, or they’re doing a finance degree, and they said, I did the Personal Finance unit. I really liked it, and I thought this is something I really, I really enjoy, and that was how they encountered the idea of financial planning. So, the fact is, they come out and they still then got to go and do eight Graduate Diploma units instead of, because it’s a related degree, so changing the way that’s approached and saying, well, they’ve actually done a very broad finance degree. Let’s give them a four-unit post grad pathway to getting to be a an adviser and get the qualified. Relations with the ethics associated with that. And so, to me, that seems like a pretty logical choice and a fairly easy decision to take. Did you get a sense from the Fore minister Jones, and perhaps, whether this was something that’s likely to be passed in this next term of Parliament?
David Sharpe
Well, it’s been proposed already, so that’s from a legend of sense. So, I think there was more support and package that actually came through from this suggestion. I’ll admit this probably not my area of strength, in terms of dates and that, or when it was launched. But we don’t want to lower standards, absolutely not. We don’t want to go back to a diploma level. But there needs to be more flexible standards, which, as you said, you’ve come from, an accounting degree, an economics degree. Why are you going doing the hot, you know, almost the whole lot again. Why not just, you know, pick out, you know, you need to these four units to top yourself up, or whatever it might be. So, I think there’s broad agreement. Again, universities are probably the challenge there, because they could then go potentially going, well, how do they build it to make that happen? This is what I talk about, the complexity of stakeholders, right? It’s all good to say. It makes sense. But who’s then going to teach that, and how they’re going to make money out of it? And if they just invested in financial planning courses, are they going to invest in this as well? Right? So, but yeah, that’s been proposed. I’m not sure where that’s at from a legislative point of view, whether it’s being passed or not, or when it’s going to be on, but I don’t think it was overly controversial.
Rob Pyne
Okay, I’ve got two more questions for you. Okay, second last question, from your perspective, what would a successful term look like for the financial planning profession under this new government. And what are the non-negotiables, as far as you’re concerned?
David Sharpe
Yeah, so, look rolling out the principal QAR, which is now DBFO, which is simplifying the documentation and allowing advisers to do what they do best, which is help their clients achieve their goals and not filling paperwork. Now if I think about the rationalisation of SOA’s and best interest duty. I just think being able to give a simple answer to a simple question that would be success. Like your nephew, yeah, like my nephew. Or, you know, use another example. Client called up, and they just work for the Electoral Commission, so they’ve got $2 of super like, where do they put it? Like, those sorts of things where they don’t have an existing accumulation account because they’re retired. Often give new advice, right? But for some say, immaterial. So, I love that to come through when we draw the line in sand, and if we think about the two-way, complex advice should be reserved for Trade Professionals. Understand. So, we don’t know what the plan is for the new class of provider that might come out. But you know, ultimately, complex advice, which is things like retirement advice and transition to advice, because it has such a flow on effect on cash flow, tax, estate planning, Social Security, you know, all those sorts of things. It’s not as simple as I’ve got $1,000 I’ll make a co contribution or not. You get it wrong. It has such a lasting impact. So, making sure that complex advice stays the domain of the trained professional, and we’ve put in our submission as well. We don’t think that should be collectively charged. We don’t think complex advice should be collectively charged as well. Simple advice, we get it, we understand simple question, simple answer, but certainly not for complex and then to your point, and if I think I don’t, if you follow Formula One, Rob, but you’ve got, you know, pastry and Norris, one and two all the time. Who’s gonna be one? Who’s gonna be two? It’s hard because DBFO and CSLR are so one and two, yeah, and it’s like, depending on what releases come out, which one we want. So, solving CSLR, solving it so that our members and our advisers know they’re not up for 12 grand a year, that they’re gonna be up for 600 bucks a year, fixed, maybe index or whatever, having that solved, and then the implementation of DBFO, that would be success over the next three years.
Rob Pyne
for sure. I’ll put PST and CSLR in the pole position, from my perspective, but because the explicit cost and it’s out of hand already and needs quickly to be addressed. Yeah, Norris in second, being DBFO and getting the reduction in implicit cost of delivery of advice through the paperwork we’ve got to digest and put in front of our clients to get the job done. So final question, David, you’ve got a blank check and full government support, what would be on your personal wish list to improve the accessibility and sustainability of quality financial advice for Australians. Probably
David Sharpe
it’s not explicitly around the cost, but I think this would actually deliver it. I would love for financial advice to be self-regulating. Now I don’t think in practicality, we’re going to get there tomorrow. Our vision is to have a level of CO regulation where maybe we control education standards or something like that in the not-too-distant future. But every other profession controls its own standards. What do we expect of one another to be able to give a professional experience to consumers? And I think if we can control our education, we can control our discipline, we can control what education is required, what documentations and standards we expect when we engage with clients, I think we can deliver that efficiently, as opposed to being set by potentially those who don’t really know what our profession does very well. And so, I would love, just from a professional recognition point of view, a level of self-regulation now, not set up for it tomorrow, but a blank check to create that. That’s what I would love.
Rob Pyne
Okay. So, you’d be asking the government of the day to trust us, to actually believe that we can self-regulate and look after our own and make sure that people are doing the wrong thing are discovered and the clients are made whole if they need to be through the inactions or the inadequacies of the advice they’ve received. So yeah, self-regulation seems like a distant prospect, because I’m not sure yet we’ve gained the trust of any government completely, but this is The Trusted Adviser podcast, so let’s hope that day comes, and I really appreciate taking the time Dave to have a chat to us today and give us an update on what we can hope to see in this re-elected Albanese government. And may you continue to do the great work you and Sarah and George and Phil and the like are doing at f triple A. I don’t think, in my experience, I’ve been going around since the mid to late 90s. I’ve never seen us better represented than we are today. So, for all the work you and the team are doing, we thank you with great appreciation, and we look forward to more positive change for our profession and so David Sharpe, thank you for joining me today on The Trusted Adviser podcast.
David Sharpe
Thanks, Rob,
Rob Pyne
Thanks for tuning in to The Trusted Adviser. Hope today’s conversation brought you new insights, inspiration for growing your business. If you enjoyed this episode, please subscribe on your favourite podcast platform, leave a review, and share it with others in the industry, and don’t forget to connect with us on LinkedIn for updates on future episodes until next time, keep building trust, embracing innovation, and driving success in your practice.